This is an MIT Sloan Management Review article. Catastrophic events, such as earthquakes, financial storms or mine collapses, can be divided into three phases, each calling for distinct forms of preparation or response. In this article, the authors look at the collapse of a mine in Chile in 2010 and the successful rescue of the trapped miners 69 days later to draw leadership lessons for decision making during a crisis. Following the decisions of Laurence Golborne, Chile's Minister of Mining, was made easier by the intense media focus on this event. His management of the miners'rescue was closely followed by people around the world. In addition to using news coverage of the rescue, the authors interviewed the key members of the top team, including top government officials, the manager of the El Teniente mine and the chief engineer on the site. Building on their previous work on leadership, the authors found 12 leadership principles that emerged from Golborne's actions. These are applicable to managers facing any kind of unprecedented crisis, one with which they have no prior experience. These include taking charge if you are best positioned to make a difference; assembling essential experts on your top team, but keeping the numbers small; delegating decisions beyond your expertise but retaining oversight of them; and being transparent about potential outcomes to sustain stakeholder support.
The armed services have been in the business of leadership development much longer than the corporate world has. Today's military leaders need tools and techniques to face a fast-changing and unpredictable type of enemy-so the armed services train their officers in ways that build a culture of readiness and commitment. Business leaders need to foster an adaptive culture to survive and succeed, given that they, too, face unprecedented uncertainty-and new types of competitors. Michael Useem and his colleagues at the Wharton School incorporate exposure to military leadership into MBA and executive MBA programs. Highlights include direct contact in the classroom with leaders in the U.S. Army, the U.S. Marine Corps, and the Department of Defense, along with field-training exercises and battlefield visits. The programs are designed to help students connect viscerally to essential leadership lessons. Four are featured in the article: (1) Meet the troops. Creating a personal link is crucial to leading people in challenging times, (2) Make decisions. Making good and timely calls is the crux of leadership, (3) Mission first. Focus on common purpose and eschew personal gain, (4) Convey strategic intent. Make the objectives clear, but give people the freedom to execute on them in their own way.
Until recently India was seen by Western businesses primarily as a source of cheap, low-skill labor. But over the past decade the country has attracted a flood of high-skill jobs from the West. Meanwhile, India's economy has grown at roughly 9% a year, and some of its largest companies have grown at twice that rate. What accounts for this? A host of economic, policy, and other environmental factors have played important roles, but the authors ascribe much of this success to the distinctively inward-focused managerial approach of Indian leaders. Through interviews at 98 of the largest India-based companies, they have identified four ways in which these leaders develop and motivate employees: Far more than their Western counterparts, they create a sense of social mission, engage employees in give-and-take, empower them to find solutions, and invest in their training and development. Western leaders should understand the managerial approaches that have fueled the rise of India's largest companies, and mindfully adapt them.
In the aftermath of seismic debacles like those that toppled Enron and WorldCom, corporate boards have been shaken up and made over. More directors are independent these days, for instance, and corporations now disclose directors' salaries and committee members' names. Research shows that most of the changes are having a positive effect on companies' performance. They are primarily structural, though, and don't go to the heart of a board's work: making the choices that shape a firm's future. Which decisions boards own and how those calls are made are largely hidden from the public. As a result, boards are often unable to learn from the best governance practices of their counterparts at other companies. This article pulls back the curtain and provides an inside look. Drawing on interviews with board members and executives at 31 companies, along with a close examination of three boardroom decisions, the author identifies several formal processes that can help companies improve their decision making: creating calendars that specify when the board and the standing committees will consider key items; drafting charters that define the decisions committees are responsible for; and developing decision protocols that divvy up responsibilities between directors and executives. The author also identifies a number of informal decision-making principles: Items that are strategically significant and touch on the firm's core values should go to the board. Large decisions should be divided into small pieces, so the board can devote sufficient attention to each one. Directors must remain vigilant to ensure that their decisions are effectively implemented. The CEO and either the nonexecutive chair or the lead director should engage in ongoing dialogue regarding which decisions to take to the full board and when. And directors should challenge assumptions before making yes-or-no decisions on management proposals.
We can't observe how leaders make decisions, so we judge--and often misjudge--those decisions by appearances, explains business professor Michael Useem.
The Himalayas are one of nature's most demanding classrooms, but they can teach us important principles about taking charge of our followers--and our own egos. In this article, Wharton professor Michael Useem recounts the experiences of MBA graduates and midcareer executives who took part in a leadership program on the lower slopes of Mount Everest. Conceived to heighten participants' appreciation of what leadership is all about, the program transforms abstract concepts into practice: Not only do people learn from the historical expeditions of others, they also gain insights from their own unfolding experiences. Through hiking some 80 miles over rough terrain, the participants learned about their own limitations--one CEO grappled with the decision to turn back when others feared the altitude had become too much for him--and about the value of communication: what to do when several team members are unaccounted for as night falls. The team also learned from those they met along the path to Everest's base camp. They benefited from rare encounters, such as a private audience with the reincarnate lama, the spiritual leader for the region's largely Buddhist population, and a discussion with a passing hiker who had been part of the harrowing Everest expedition described in the best-seller Into Thin Air. During the journey, four essential principles emerged: Leaders should be led by the group's needs; inaction can sometimes be the most difficult--but wisest--action; if your words don't stick, you haven't spoken; and leading upward can feel wrong even when it's right. Through compelling stories of the trekkers' triumphs and miscalculations, the author sheds new light on several central management principles.
Corporate restructuring has been the focus of much debate in the past few years. This article addresses the debate about the effectiveness of corporate restructuring by examining 52 studies presented within 25 research articles on restructuring and its impact on economic performance. The authors distinguish three forms of restructuring: financial, portfolio, and organizational. Based on the research reviewed here, financial restructuring has the highest positive impact on performance, followed by portfolio restructuring. Organizational restructuring has little consistent impact on performance.